Saudi Arabia to lower oil prices, the houston boom is over

No it's not. One part of the Fed's dual mandate is to control and limit inflation, which has been about as low as anytime in our history over the last 6 years.

The Fed does aim a small amount of steady inflation, but type of inflation is very different from the type we're talking about here. It's economy-wide (thus raising wages also) as opposed to specifically of core inputs.

Until the last month, I don't think anyone has ever argued that higher energy prices were a good thing for a consumer-driven economy. The only economies that benefit from high energy prices are the ones that primary produce energy (Russia, Saudi, etc). This is probably the most bizarre economics conversation I've ever had.

 

The Federal Reserve does track the CPI and has at times set 2% as its benchmark for inflation, and the US at times the past 2 years has been the largest oil producer. It is also a higher cost producer than Russia or Saudi Arabia. The glut in the 1980s came from the lowest cost producer; the glut today is coming from the highest cost producer. I don't see how these things are not obvious.

 

I still got a raise and a bonus. But here's what you don't understand reeko. Most of us could have gotten nothing and we would be better off than the majority of folks. That's not what we're concerned about. We want the oil price to rebound so we're okay in the long-term.

Now, the services companies.. They're getting hit hard already and some E&P companies like Apache that aren't well positioned have announced layoffs.

Tbh, I really haven't felt any difference from paying less at the pump. It seems like just the lower income folks are the ones jumping up and down.

 

I'm curious to see what happens with the housing market in Houston. From what I've been reading and hearing from friends that are realtors, the third quarter of 2015 we should see at least a 20% drop in the housing market. The prices of housing in Houston is way over priced and it's been like that for years now. A lot of this has to do with the O&G boom in Houston. People were making a killing in the housing market here. If the values of these homes drop like they're projecting, this should make it easier for folks who waited on buying.

As for O&G, it would be very naïve to think that this wasn't going to happen. That industry has done well for many years while others have struggled. I hate to see anyone unemployed. I have cousins that didn't go to college but were able to get in the oil field. They're currently making close to $150K a year but now are faced with potential layoffs. Family or not, there's a reason why you should always plan ahead.

 

That's great you've been able to get a raise and a bonus. I work in the medical field and I know a lot of people that didn't get a raise or a bonus for almost three years.

As for only lower income folks are jumping up and down? I work with physicians on a daily bases and they're very happy about this. They have kids that are in college that have to drive long distant to visit. Many of their kids would wait a while before coming home because of gas prices.

I do get what you're saying but it's not just the lower income individuals that are happy.

 

I don't think 40 dollars a trip was going to prevent anyone from making a long trip.

If you have to think about that kind of stuff you shouldn't be driving in the first place.

 

LOL if you think $40 is all that it takes. Be realistic. Do you know how expensive it is to go to school? The cost for housing?

 

You referenced driving home and gas prices.

It's been about a 40-50$ decrease for fill up compared to what it was last year.

I'm just saying that it really isn't that big of a deal and gas prices last year weren't preventing anyone from doing anything.

*separate note

I wonder, how come the airlines aren't dropping prices?

 

I get what you're saying. I do but how can you say that it wouldn't prevent people from doing things? You can't and neither can I say that. Everyone's situation is different regardless if you make $100,000 or $15,000 a year.

I know higher prices for gas does prevent people from doing things just like higher prices on goods. When the recession hit in 2008, look at all the Dollar General stores that did really well during that time. People will always have to make adjustments.

It sucks that people in the O&G are faced with this.

 

I thought airlines were dropping prices?? I get stuff from Southwest and AA all the time with their "low fares" offers.

 

The medical field is ridiculous.

40$ an hour nurses. Give me a freaking break.

My old roommate was a male nurse, and was a complete dumbass. Happy for his economic success, but he was worthless.

 

Apparently they are still buying oil prices at the same rate they were this summer via contacts from the summer.

Once the contract runs out they will begin lowering prices.

 

I don't have empirical data points, but yeah, I think there needs to be a more precise comparison of the balance of the effects.

Also, clearly slowing global demand is also a factor of the current reduction in prices. Once again, I haven't looked closely at the numbers, so I would need to confirm if I had some spare time.

 

It's great for our region's consumers!

 

You're trying to convince texans that lower gas prices are a good thing? Home of Republican Ted Cruz, Home of the Politically-conservative, Home of Gun-toting yahoo's, yeah, good luck with that.

 

Your point is basically moot. Demand isn't going up. People aren't driving more just bc prices are low. Actually, demand may be going down globally. US production is increasing supply. Prices continue to drop. Simple economics.

It does depend on the number of people driving in the household. My savings may be $150 a month from my wife and I but like I said..I'm not sure if I'm actually feeling it. I know that I'm not spending any differently.

 

This is what the US gets for chasing high oil prices... throwing 0 interest money at these unconventional oil sources. Knowing full well they could have the rug taken out from under.

Lulling the working class into a sense of security

Just another example of how fundamentally broken our economy is


Watch the fallout

 

Demand's going up overall, but growth rate slowing for sure, and energy efficiency improvements and intentional efforts to use less energy are also contributing to slowing demand growth. Long term, there is still a growing need for energy in terms of absolute value. And renewable generation as % of all sources will gradually increase.

 

Good post. Thanks.

 

With patents for EVs and hydrogen fuel cells going publicly available, I expect the alternative fuels to rapidly diminish petro fuel demand for consumer vehicles over the next 30+ years.

Algae based hydrocarbons may also eat into the materials demand for petrochemicals. These are also good for commercial transport fuels


Oil dominance is on its last legs.. plan for the future ppl